In Private Markets Top 25% of Companies Driving Returns

NEW YORK, June 21, 2018 /PRNewswire/ -- CEPRES, the leading provider of investment decision analytics for private markets, today released research they recently conducted for the Institutional Limited Partners Association (ILPA) and presented at their Annual Members Conference. By analyzing the outcomes of 58,000 companies invested by private equity and private debt funds, they showed that revenue growth is the biggest global driver of value creation and buyout investment returns even if other factors vary strongly across the regions. Further in the current market, only 25% of portfolio-companies are significantly growing revenue and more than 50% have decreasing revenue CAGR: so buying the market introduces inherent beta risk for investors (LPs). Fund managers (GPs) are maintaining discipline in the market and recovery rates are at all-time high even as defaults increase.

Highlights:

• Analysis of 58,000 PE-backed companies worth $19.2 trillion from 5,200 private funds
• Value creation factors:
• Revenue growth largest factor for value creation globally
• US buyouts also driven by multiple expansion, which is an uncertain future factor
• Asian deals most influenced by margin growth and operational improvement
• In current market only top 25% of companies are significantly growing revenue
• Deal default rates are trending higher, an early indicator of market stress
• Recovery rates remain high

The full report is available to CEPRES members from: https://www.cepres.com/cepres-ilpa_mcon

Commentary:

"With market pricing and leverage at record levels, investors are rightly looking at fundamentals of the portfolio companies for their commitment decisions. PE.Analyzer's Market Analytics proves the private equity model has worked with returns primarily driven by top line growth of companies. The market is now driven by fewer very aggressively growing companies, especially in the high-tech space, so GPs need to prove their ability to pick and foster the best growth companies, across all their companies to reduce cluster risks."

Dr. Daniel Schmidt, Founder & CEO CEPRES

About PE.Analyzer

PE.Analyzer is an online investment decision network for private markets. It delivers easy and powerful due diligence and portfolio analysis to 1,000s of institutional LPs and GPs encompassing 58,000+ private market investments and portfolio companies worth $19.2 trillion USD. It is the only platform providing Technical & Fundamental benchmarking of private deals and portfolio companies to institutional investors and fund managers to underwrite their investment decisions and support their fundraising goals.

About CEPRES

CEPRES is an innovative FinTech company helping investors and fund managers in private markets become stronger investment professionals through advanced tools, thought leadership and deep investment data. Through CEPRES, Investors (LPs) and fund managers (GPs) can interact on a single, confidential platform in complete privacy. LPs gain deep market insights, forecast investment outcomes and enhance due diligence to drive better investment returns. GPs can manage their track record, precisely benchmark their deals and find new sources of capital from around the world. For further information, visit www.cepres.com.

For more information about this release, or to schedule an interview:

Contact: Miruna Aftenie
Tel: +49 (0) 89 232 4956 13
Email: [email protected]

SOURCE CEPRES Corp